Accrual Basis, KPMM Adjusting Entry, Credit Return Entry

A. Cash must be paid before expense is recognized.
B. Since the depreciation expense is a non-cash item, it is not shown in the Income Statement.
C. The Cash Basis is preferred by GAAP since the Cash Basis is simpler than the Accrual Basis.
D. Expenses should match with revenue and adjusting entries are needed to bring the accounts up to date.

8. The KPMM Accounting firm purchased 10 laser toner cartridges for $60 each for a total of $600 on June 1 and recorded the purchase as an asset. On June 30, an inventory of the toner cartridges indicated only 2 on hand. The adjusting entry that should be made by the firm on June 30 is